What is the present worth for each scenario

Reference no: EM132013926

Question: A new 2-lanc road is needed in a part of town that is growing. At some point the road will need 4 lanes to handle the anticipated traffic. If the city's optimistic estimate of growth is used, the expansion will be needed in 4 years. For the most likely and pessimistic estimates, the expansion will be needed in 8 and 15 years, respectively. The expansion will cost S4.2 million. Use an interest rate of 8%.

(a) What is the present worth (PW) for each scenario, and what is the range of values?

(b) Use scenario analysis method to find the mean value of the expansion's PW.

(c) If the most likely estimate has a probability of 0.6, and the optimistic estimate has a probability of 0.1, what is the expected PW of the expansion?

Reference no: EM132013926

Questions Cloud

Narrative and examination of a place effective : Edward Abbey's "Havasu" What makes this narrative and examination of a place effective? Is it more about the author, or the place? Why and how?

What the general responsibilities would be in short : Describe the roles and responsibilities of the different typical and atypical partners in the disaster recovery process.

What makes an argument clear and precise : What makes an argument clear and precise? How can this be applied to a final argument paper?

Differences between college-level academic writing : Name some key differences between college-level academic writing and writing an email to a friend?

What is the present worth for each scenario : A new 2-lanc road is needed in a part of town that is growing. At some point the road will need 4 lanes to handle the anticipated traffic.

Second amendment and support an assault weapon ban : There may be some common ground between the two sides. Is it possible to support the second amendment and support an assault weapon ban?

How much do you think hulu business operations are worth : Netflix, an online video streaming service, has 29 million subscribers. It has 427 million shares outstanding, 2.4 billion in debt, 2.6 billion in cash.

How does the poet make use of the physical description : LCS 352: What is the setting? What is the time and place? How does the poet make use of the physical description? Does it create a mood?

How much debt will you need : You are the new CFO of Megasoft. Megasoft has $ 1billion market value. It currently has no debt. Corporate tax rate is 40%. You make a compelling argument.

User Account

All Pages